Don’t Change Horses in the Middle of the River

by Brent Erickson (Biotechnology Innovation Organization/Biofuels Digest) We were disappointed, but not surprised, to see Mike McAdams and his members come out in support of changes to the Renewable Fuel Standard in Biofuels Digest (July 26 – The Time Has Come for RFS Reform).

Unfortunately, McAdams’ op-ed incorrectly claims that because the first generation of biofuels have come online ahead of second generation biofuels, the RFS is irreparably damaged and needs legislative reforms. This denies all the realities the biofuels industry has dealt with in the last ten years and utilizes the oil industry’s tactic of dividing the biofuels industry instead of working together to gain greater space in the transportation fuel sector. Rather than subject the RFS to attempts at legislative reforms in an uncertain political environment, we should instead push EPA for correct and timely implementation of the RFS, a strategy with which we have seen success.

The biggest impediments to advanced and cellulosic biofuels coming to commercial scale and reaching consumers are tied to the previous administration’s vacillation and poor handling of implementation of the RFS, as well as the oil industry’s unwillingness to utilize alternatives to petroleum. The 2014-16 RFS Renewable Volume Obligations (RVO) forced conventional and advanced biofuel producers to compete for limited shares of the transportation fuel market, discouraging investment in new technology. EPA’s delays and methodology —which unlawfully equated the oil industry’s distribution of biofuels with “supply” – led to a $22.4 billion shortfall in the investment in advanced biofuels.

This approach was inconsistent with the law and inconsistent with Congressional intent. However, instead of calling for Congress to change the RFS, which had been working to bring investment in our space, BIO and allied trade associations worked with members of Congress to put pressure on the administration and the EPA to properly implement the RFS.

As a result of these efforts, EPA set the 2017 RFS volumes at the appropriate levels, sending a signal to investors that there would be market space of advanced and cellulosic biofuels. The recent U.S. Court of Appeals for the District of Columbia Circuit opinion siding with those in the biofuels industry who challenged EPA’s rule setting in the 2014-16 RFS validated that the problem is not with the RFS, but rather, that EPA had diverted from how the law is to be administered.

Which brings us to the second issue impacting the RFS and the investment in and development of advanced and cellulosic biofuels. Since the enactment of the RFS in 2007, the biggest impediment to the law being consistently implemented has been the oil industry. Whether through litigation, petitions to change the rules, or lobbying efforts, the oil industry has tried every tactic to avoid complying with the RFS and utilizing higher biofuel volumes.

It is important to point out that weakening the RFS legislatively will not make the oil industry any more willing to use a drop-in advanced biofuel — it is still a competing product. Instead it would inject greater uncertainty into a volatile market.

The biofuels sector needs to be unified and to insist that Congress exercise oversight authority over EPA and that EPA work to administer the RFS as the law intended, in order to bring advanced and cellulosic biofuels to market. With proper Congressional oversight and the necessary resources given to EPA, the RFS will enable these new technologies to be brought online. This will give investors and developers of these technologies the certainty that there will be a market for their fuels in the future. READ MORE